Benchmarks to open in green; macro-economic data eyed

Indian markets ended higher with modest gains on Wednesday led by gains in banking and auto stocks amid firm cues from other Asian markets. Today, the start of session is likely to be in green tracking firm global cues coupled with steep fall in oil prices. Investors will be eyeing the data on factory output (IIP) for July and retail inflation (CPI inflation) for August set to be release later in the day. Traders will be taking support with finance minister Nirmala Sitharaman’s statement that the government will frontload infrastructure spending in a bid to give the economy a boost and announce one or two more sets of stimulus measures aimed at reviving growth in the coming quarters. Though, there may be some cautiousness with global rating agency Moody's statement that Indian non-banking financial companies (NBFCs) and housing finance companies (HFCs) are pulling back on loan against property (LAP) lending to micro, small and medium sized enterprises (MSMEs) because of the funding squeeze caused by the liquidity crisis in the country's financial sector. It added that this situation is a credit negative for the asset- backed securities. Meanwhile, oil producers cartel the Organization of the Petroleum Exporting Countries (OPEC) said that India's oil demand will rise by the fastest pace globally this year and the next even as its economic expansion has slowed down. Auto stocks will be in focus with Union minister Nitin Gadkari’s statement that it is up to the finance ministry along with state governments and GST Council to decide on reduction in GST rate for automobiles and that he has already spoken to the finance minister in this regard. There will be some buzz in the banking stocks with report that the government has decided to infuse Rs 55,000 capital in Public Sector Banks (PSBs) under consolidation process in a week's time. There will be some reaction in aviation stocks with Crisil’s report that low-cost airlines like SpiceJet, IndiGo and Air Asia (India) are set to see their earnings before interest, tax, depreciation, amortisation and lease rentals (EBITAR) to grow to 24-25% this fiscal compared to 15-16% in the last fiscal on the back of firmer fares and strong passengers loads.

The US markets ended higher on Wednesday amid reports that China is granting tariff exemptions for 16 types of American-made products as a sign of goodwill ahead of the next round of trade talks. Asian markets are trading mostly in green on Thursday on hopes for a thaw in US-China trade frictions and expectations that the European Central Bank will kick off another wave of monetary easing by global central banks.

Back home, Indian equity bourses maintained their gains on Wednesday to end the session on higher note.  Key indices made a positive start of the day, aided with Finance Minister Nirmala Sitharaman’s statement that the up and down in Gross Domestic Product (GDP) are part of the growth process and the government is responding to the current economic challenges to revive demand and consumption in the country. Adding some optimism, the Export-Import Bank of India (Exim Bank) forecasted India’s merchandise exports to increase from $81.4 billion to $82 billion, with an expected growth rate of 0.6% from a year ago during the second quarter of 2019-20 (July-September). Firm trade persisted throughout the trading day, on the back of positive cues from the global markets.  Investors were seen taking note of a private report stating that India's high-tech sectors have the potential to attract a whopping $21 billion in investment and create millions of jobs over the next five years. However, gains remained capped, as credit rating agency, Fitch Ratings in its Asia-Pacific Sovereign Credit Overview has forecasted India's economic growth at 6.6% during the current year 2019-20 (FY20), down from 6.8% in the previous year. The agency also added that the government has only limited room to ease fiscal policy because of high debt. Finally, the BSE Sensex gained 125.37 points or 0.34% to 37,270.82, while the CNX Nifty was up by 32.65 points or 0.30% to 11,035.70.